Brown County reserve funds total about 18 percent of annual budget

March 09, 2008|By Scott Waltman, swaltman@aberdeennews.com

Should the county find itself in a financial bind, it has only one option aside from going into debt: Tap its reserves. Counties in South Dakota are allowed to have reserve funds that total as much as 40 percent of their annual budgets. Now, though, Brown County's reserve total is about 18 percent, said Maxine Taylor, county auditor. Amount flucuates: The amount of money in reserves fluctuates quite a bit throughout the year. Commissioner Deb Knecht said when she was elected to the commission in 1996, the reserve was close to $4 million. At one point, though, it was down to $187,000, she said. The $4 million amount was too much, the $187,000 way too little, she said. Generally, though, the county's year-end totals have been more consistent than the highs and lows Knecht cited. (See accompanying numbers.) It's best to keep between $2 million and $2.5 million in the county reserves, Knecht said. That's enough to cover sizable unforeseen expenses without just socking money away unnecessarily. How money is used: County reserves can be tapped for only one reason, Taylor said: to supplement budgets. Doing so could happen soon. County commissioners might have to use close to $500,000 in reserve money to pay for a portion of jail renovations that are now being finished. Enough money hadn't been saved before work on the $1.47 million project started. A supplement could provide the difference. It's more common, though, that smaller amounts have to be taken out of reserves to supplement budgets nearer the end of the year. Where money comes from: Money is put into reserves in two ways, Taylor said:

When actual revenue is higher than estimated revenue, the extra money goes into reserves.

When a department has leftover budget money at year's end, those funds are shifted to reserves. Unlike school districts, counties don't have capital outlay funds in which they can save for future construction. And unlike cities, counties don't have special sales tax funds that can be used for capital improvement projects, public safety and land acquisition. Commissioner Mike Wiese suggested in recent months that South Dakota counties sponsor legislation that would allow them to create capital outlay accounts. However, the idea never gained enough support from other counties statewide to be introduced during the legislative session in Pierre. End-of-year general fund reserve totals for Brown County 2007: Not yet figured. 2006: $1.61 million. 2005: $2.44 million. 2004: $1.86 million. 2003: $1.46 million. 2002: $870,312. 2001: $1.59 million. 2000: $1.7 million. Source: South Dakota Department of Legislative Audit unadjusted totals.